History of Union Budgets in India: From Independence to Viksit Bharat

What is the Union Budget?

The Union Budget is the Central Government’s annual financial plan. It reports how much money the government expects to earn and spend in the current year, and estimates for the next year. It is also a policy document that outlines taxation changes, fiscal priorities, reforms, and future economic vision. The Budget is presented every year before the financial year begins and is officially called the “Annual Financial Statement” under Article 112 of the Constitution. Markets and investors track it closely for policy signals and sector implications.

In 2026, Finance Minister Nirmala Sitharaman will present the 80th Union Budget on Sunday, February 1, 2026, targeting long-term goals like Viksit Bharat 2047, while facing global headwinds such as US tariff policies.

Early Years Post-Independence (1947-1960s)

India’s first post-independence Budget was presented in November 1947 by Finance Minister R.K. Shanmukham Chetty. It came during a turbulent time marked by the India-Pakistan partition, refugee crisis, and conflict in Kashmir. Defence and rehabilitation dominated spending.

In 1950, the formation of the Planning Commission shifted India toward a state-led planned economy. Budgets prioritised defence, public sector growth, and reconstruction, leaving limited space for development and social infrastructure.

Wars, High Taxes and Austerity (1960s-1970s)

During 1962-71, wars with China and Pakistan forced higher defence spending and high taxation. Income tax rates touched extremely high levels, and import substitution policies were adopted to save foreign exchange.

The 1971 Indo-Pakistan war and the creation of Bangladesh stressed public finances and triggered inflation. In 1975-77, during the National Emergency, the government imposed price controls, rationing, and anti-hoarding measures, lowering inflation briefly but causing political backlash.

The 1977 Janata Party government rolled back emergency measures, but internal political instability and an economic slump led to the return of Indira Gandhi in 1980.

Shift Toward Modernisation (1980-1990)

Indira Gandhi’s second term (1980-84) focused on stabilising the economy, modernising industries, easing licensing restrictions, and controlling inflation. Rajiv Gandhi (1984-89) accelerated computerisation, telecom growth, tech adoption, and eased the Licence Raj further, laying the groundwork for reforms.

However, scandals, unstable coalition governments, global oil shocks, and currency crises pushed India into a severe Balance of Payments (BoP) crisis by 1991.

1991 Liberalisation and After

In 1991, Finance Minister Dr. Manmohan Singh and PM Narasimha Rao opened up the Indian economy through the famous LPG reforms (Liberalisation, Privatisation, Globalisation). Import duties were slashed, licensing was eased, the rupee was devalued, and foreign investments were welcomed, saving India from default and reshaping the economy.

In 1997, FM Chidambaram introduced the so-called “Dream Budget”, cutting taxes and boosting consumption despite coalition pressures.

Reforms, Growth, and Welfare (2000s-2025)

Under PM Atal Bihari Vajpayee (1999-2004), budgets supported highway development (Golden Quadrilateral), telecom reforms, privatisation, and groundwork for fiscal responsibility laws.

The UPA era (2004-2014) combined welfare schemes like MGNREGA and Right to Education with periods of high growth. However, the post-2008 global crisis and domestic scandals slowed reforms and weakened investor sentiment.

From 2014 onwards, the Modi government pushed major structural reforms such as GST, IBC, Jan Dhan, UPI, corporate tax cuts, and PLI schemes. Digitalisation, infrastructure spending, and a manufacturing push helped India become the fastest-growing major economy heading towards a $4 trillion GDP.

Conclusion

Over 78 years, India’s Union Budgets have evolved from post-war survival and state-led planning, through crises, coalitions, and landmark reforms, to a forward-looking strategy aimed at Viksit Bharat 2047. Each phase, whether 1947 stabilisation, 1991 liberalisation, or 2014+ structural reforms, shaped India’s economic journey. As markets await the 2026 Budget, expectations for bold reform measures remain high.